HP Adhesives Limited IPO opens today: Marwadi Shares and Finance Ltd says subscribe

HP Adhesives Limited initial public offer (IPO) is all set to open on Wednesday, December 15, 2021. The three-day offer will close on December 17, 2021. One of the fast-growing multi-products, multi-category consumer adhesives and sealants company in its segment, HP Adhesives Limited has fixed the price band at Rs 262 to Rs274 per equity share.

As per the company, around 4.6 million shares will be offered in the Rs 126 crore issue. The IPO comprises a fresh offer of 4.14 million shares for Rs 113.4 crore and an offer for sale of about 457,000 shares by shareholder Anjana Haresh Motwani aggregating up to Rs 12.5 crore.

Earlier on Tuesday, December 14, HP Adhesives mopped up Rs 56.68 crore from three anchor investors, ahead of its initial public offering (IPO).

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As much as 75 percent of the total IPO size has been reserved for qualified institutional buyers, 15 percent for non-institutional bidders, and 10 percent for retail investors.

What should investors do with this IPO?

Well, Marwadi Shares and Finance Ltd has given it a subscribe rating citing reasonable valuation.  

Considering the TTM (Sept-2021) adjusted EPS of Rs.5.57 on post issue basis, the company is going to list at a P/E of 49.23 with a market cap of Rs 5, 035 million, while its peer namely Pidilite Industries Limited is trading at P/E of 89.75, said the brokerage.

"We assign “Subscribe” rating to this IPO as it is a fast-growing adhesives and sealants company with established brand presence. Also, it is available at reasonable valuation compare to its peer," it said.

The company offers wide range of consumer adhesives and sealants such as PVC, cPVC and uPVC solvent cement, synthetic rubber adhesive, PVA adhesives, silicone sealant, acrylic sealant, gasket shellac, other sealants and PVC pipe lubricant which are sold across India. The company also sells ancillary products like ball valves, thread seal and other tapes and FRP products for drainage and architectural solutions that are distributed along with their products.

"As of September 30, 2021, the company’s distribution network comprised of 4 depots situated in Delhi, Kolkata, Bengaluru and Indore and more than 750 distributors who cater to more than 50,000 dealers in India," as per Marwadi Shares and Finance Ltd.